The 70-year-old Madoff was arrested on one count of securities fraud on December 11.Â Madoff – once a chairman of the Nasdaq stock exchange – is the founder and primary owner of Bernard L. Madoff Investment Securities LLC. The firm is primarily known for its business in market-making, or serving as the middleman between buyers and sellers of shares. However, Madoff also oversaw an investment-advisory business that managed money for high-net-worth individuals, hedge funds and other institutions.

According to the FBI complaint against Madoff, that business was largely a Ponzi scheme.Â The FBI said MadoffÂ â€œdeceived investors by operating a securities business in which he traded and lost investor money, and then paid certain investors purported returns on investment with the principal received from other, different investors, which resulted in losses of approximately billions of dollars.â€ Madoff reportedly told employees that his fraud could cost investors as much as $50 billion.

The SEC has already admitted to failures in its oversight of Madoff.Â On December 17, SEC chief Christopher CoxÂ ordered an internal investigation to uncover why his agency failed to launch an investigation of Madoffâ€™s investment business even after â€œcredible and specific allegationsâ€ were brought to the SEC.

In an email statement, committee member Paul Kanjorski (D-PA) said the January 5 hearing will “help us to discern whether or not the Securities and Exchange Commission had the resources needed to get the job done, how such a sizable scheme could have evaded detection for so long, and what new safeguards we need to put in place to protect investors.â€Â Kanjorski did not say who would be called to testify at the hearing.

The SEC has faced a great deal of criticism over the Madoff scandal. According to The Washington Post, the SEC conducted routine examinations of the company in 1999, 2004, and 2005, as well as investigation that ended in 2007. Only the 2005 examination found â€œminor problemsâ€.

Of particular concern is the relationship between Madoffâ€™s niece, Shana Madoff, and her husband, Eric Swanson.Â Shana Madoff served as her uncleâ€™s compliance officer, and Swanson, a former SEC official, was involved in the 2004 SEC examination of Madoffâ€™s business before their marriage, the Post said.Â Swanson also conducted an internal review of the 1999 examination.

The SEC maintains that Swanson played no role in any Madoff examinations after his personal relationship with Shana Madoff began in 2006Â Â But according to the Washington Post, Madoff reportedly bragged of their marriage at a conference last year, when he spoke of having â€œcloseâ€ ties with regulators.

At least one investor has already brought a claim against the SEC for its role in the Madoff scandal.Â According to a report that appeared in Newsday last week, Phyllis Molchatsky, 61, of upstate New York, has filed an administrative claim against the SEC, accusing the regulator of â€œnegligent conduct.â€ Molchatsky is seeking $1.7 million in damages from the SEC for allowing Madoffâ€™s alleged Ponzi scheme to continue unchecked for at least a decade. If the SEC doesnâ€™t respond to Molchatskyâ€™s claim in six months, she can pursue her allegations against the agency in a federal court, Newsday said.